Rafale Deal Nosedives in Negotiation Combat

[anant_s]

Again the issue is not whether to go for Rafael or not. It is with what offsets and how much to milk them. If HAL gets its act together, we are today in a very good position to get a great deal on any defence deal from a multitude of sources. With the present government employing the technique of getting technocrats and other non-politicos purely on merit basis as consultants, we should see some kind of improvement in defence too. But then, even our defence "experts" tend to get swayed by the mega bucks in the biz. Lets see how this plays out

Do you think that government might be trying to "time" the deal in such a manner that by the time Rafale starts getting manufactured in India, HAL would've almost completed its production of 272 MKIs (i guess there are 210-220 right MKIs right now and in next 4-5 years, this program would finish).
With MKI production lines closed, HAL can concentrate on Rafale and LCAs only, which would not stretch the capacity existing at HAL and focused approach. I'm not sure of of HAL's production capacity (@sandy_3126, help here!) but three or more parallel running front line fighter programs might not be easy to manage.

 

[halloweene]

So have the CNC's demands (according to you) been met? Is there forward movement on this deal now or still stalled (according to the media)?

Stalled, but issue is to be solved very quickly imho.

 

[Stephen Cohen]

Stalled, but issue is to be solved very quickly imho.

Sir , So the differences between India and France are NOT unsolvable

And they are Not going to be deal breakers

 

[anant_s]

@halloweene
Sir, how is the deal being seen in France and what are the views of industry and Government over the protracted negotiations. Here in India, different sections of media are projecting contradictory views wrt to cost as well as differences that are existing among negotiating teams.
Til date, only positive views coming are from senior government officials and ministers that have expressed some movement taking place, but obviously there is more than what meets the eye.
I would be interesting to know perspective from France.

 

[halloweene]

@halloweene
Sir, how is the deal being seen in France and what are the views of industry and Government over the protracted negotiations. Here in India, different sections of media are projecting contradictory views wrt to cost as well as differences that are existing among negotiating teams.
Til date, only positive views coming are from senior government officials and ministers that have expressed some movement taking place, but obviously there is more than what meets the eye.
I would be interesting to know perspective from France.

You can call me Yves, as near everyone know my real identity here

The french middleman doesen't really care about the deal, he is more interested in unemployment etc. One must understand that most of us french do not really have a realistic idea on how comfortable we live, with near free good quality healthcare etc. So as to give you an example, poorest people are given a help of about 600 euros/month called RSA (as far as they prove they are looking for a job) and have totally free healthcare.... Recently a french djihadist waned because his ipod didn't work anymore and he wanted to come back to France. Of course what i'm saying is somehow exagerated, but deaths due to frost (not hunger) can be counted on single our double digit/year in France. Not having a mobile phone and sat TV is considered as a very poor condition.

So sometimes you will have an article on TV, but rarely, and french are the prime experts in the world about french bashing. You will often see TV reporters talking about Rafale being unaffordable etc. Specially when it comes to left side media as Serge Dassault is also a right wing senator... (and maybe involved in a small size political scandal).

Basically, popular people do not care, they just accidentally hear about it.

To come back to the subject, industrials and informed people are very interested in the deal. Not only about the industrial deal, but also in tightening strategic relationship with a large democracy which is meant to control indian ocean one day or another.

Of course we are a small country involved in many conflicts (recently Lybia, Mali, CAR...) so we may sometimes be distracted.

What i can tell you from insiders (i cant quote them i am sorry) for the few years i tried to follow the deal.

(i) Dassault will not accept a messed deal. IAF was the very first export client and they will sigh only if they consider that IAF will be satisfied by the products.
(ii) Some indian partners may become part of the general supply chain for Rafale planes (including french ones)
(iii) MLU will be made in partnership with India. a vice president of Dassault told me "it would be stupid to do otherwise"
(iv) The only left issue is the 100% liability asked to Dassault. And it was not in RFP. I was recently told "it would be the best way to deresponsabilize local partners". Everything else is wrapped up in a 15000 long pages contract.
(v) All (or so ) idian subcontractors hve been identified, audited and contracts are ready to be signed
(vi) The industrial process in india is "in the pipes" and many people are preparing to move to india. For a long time. Generally speaking the idea is "if you want us to be liable, you do it on our way and we have eyes on the process"
(vii) ToT and workshare agreement habe long been solved now.

The general idea is to ramp up indigenous content during production by HAL. Relaince is there to have a second supply chain, HAL has always been known a prime contractor.

All in all, defense, diplomatic and military people are very interested in the deal. Middleman do not care. But what recently Trappier (Dassault CEO) and Le Drian (MoD) said (optimistic etc.) are heavy words fro mour poinit of view.

Cheers,

Halloweene

PS about costs, it is very difficult to answer you, first because i dont know (off the shelf costs of Rafale for France are public, but they do not include training, ToT, training of suppliers etc.), second because there are so many ways to calculate such a deal...

 

[Stephen Cohen]

@halloweene

Thanks for this information ; It looks like some " Paid media " in India
is trying to spread mis nformation deliberately

 

[JohnyD]

lets negotiate the best deal, no compromise on quality and transfer of tech know-how. Meantime, we should consider to put up another production line for advanced version of MKI to maintain the required level of squadrons and edge over our enemies!

 

[nik22]

Deal should not be signed.

 

[anant_s]

You can call me Yves, as near everyone know my real identity here

The french middleman doesen't really care about the deal, he is more interested in unemployment etc. One must understand that most of us french do not really have a realistic idea on how comfortable we live, with near free good quality healthcare etc. So as to give you an example, poorest people are given a help of about 600 euros/month called RSA (as far as they prove they are looking for a job) and have totally free healthcare.... Recently a french djihadist waned because his ipod didn't work anymore and he wanted to come back to France. Of course what i'm saying is somehow exagerated, but deaths due to frost (not hunger) can be counted on single our double digit/year in France. Not having a mobile phone and sat TV is considered as a very poor condition.

So sometimes you will have an article on TV, but rarely, and french are the prime experts in the world about french bashing. You will often see TV reporters talking about Rafale being unaffordable etc. Specially when it comes to left side media as Serge Dassault is also a right wing senator... (and maybe involved in a small size political scandal).

Basically, popular people do not care, they just accidentally hear about it.

To come back to the subject, industrials and informed people are very interested in the deal. Not only about the industrial deal, but also in tightening strategic relationship with a large democracy which is meant to control indian ocean one day or another.

Of course we are a small country involved in many conflicts (recently Lybia, Mali, CAR...) so we may sometimes be distracted.

What i can tell you from insiders (i cant quote them i am sorry) for the few years i tried to follow the deal.

(i) Dassault will not accept a messed deal. IAF was the very first export client and they will sigh only if they consider that IAF will be satisfied by the products.
(ii) Some indian partners may become part of the general supply chain for Rafale planes (including french ones)
(iii) MLU will be made in partnership with India. a vice president of Dassault told me "it would be stupid to do otherwise"
(iv) The only left issue is the 100% liability asked to Dassault. And it was not in RFP. I was recently told "it would be the best way to deresponsabilize local partners". Everything else is wrapped up in a 15000 long pages contract.
(v) All (or so ) idian subcontractors hve been identified, audited and contracts are ready to be signed
(vi) The industrial process in india is "in the pipes" and many people are preparing to move to india. For a long time. Generally speaking the idea is "if you want us to be liable, you do it on our way and we have eyes on the process"
(vii) ToT and workshare agreement habe long been solved now.

The general idea is to ramp up indigenous content during production by HAL. Relaince is there to have a second supply chain, HAL has always been known a prime contractor.

All in all, defense, diplomatic and military people are very interested in the deal. Middleman do not care. But what recently Trappier (Dassault CEO) and Le Drian (MoD) said (optimistic etc.) are heavy words fro mour poinit of view.

Cheers,

Halloweene

PS about costs, it is very difficult to answer you, first because i dont know (off the shelf costs of Rafale for France are public, but they do not include training, ToT, training of suppliers etc.), second because there are so many ways to calculate such a deal...

Merci Yves (thats the only French word i know )

Well for the starters it is a totally different pov to what we've heard so far.
A section of Indian media is trying to create a picture that this deal is jinxed and might not be signed for reasons as varied as Costs to technological inferiority (u name it).
I guess, if we talk of natural justice, Dassault has right to stand its ground when it is tasked with liability of all 126 pieces proposed and to be honest it should have a right to choose the partner.
However the contradiction comes from the fact that India wants to absorb as much as possible technically from the deal as possible for its own aviation industry. Till some time back that would've meant tech infusion to state controlled HAL.
However with new government at helm and it forwarding Make in India motto, serious private players like Reliance, Tata etc will get into fray.
Now the trouble is that when a huge amount of offset value comes back to India and that actually helps some private player, a lot of people will not be amused and there will be hue and cry of Govt. supporting private sector in place of HAL. Now while private players are more professional and u can expect results, this is a sort of dilemma for govt. of whom to support.
HAL isn't bad at manufacturing (i said about MKI and hawk program somewhere earlier in this thread), but they aren't epitome of efficiency either and as u said Dassault would want to make an example out of this deal to world for forwarding its product, so they would want to step very carefully. Any botch up and it will not only be souring relations but a bad PR exercise too.
I was just thinking, any chance of Dassault setting up a manufacturing shop here in India, that will allow to break some of this deadlock.
PS My wife and me once had a chance to savor Chocolate Eclair in Mumbai by a French Patisserie. Both of us have been fans of France since then. I hope Rafale would be as delightful to IAF as was the dessert to us.

 

[sancho]

(ii) Some indian partners may become part of the general supply chain for Rafale planes (including french ones)...

...Generally speaking the idea is "if you want us to be liable, you do it on our way and we have eyes on the process"

And there lies the real problem, because Dassault wants these Indian companies to supply parts for French or export Rafales at lower costs than in Europe, that's why Dassault is so eager to create copy production lines from their own once, which works with Reliance since they don't have any production line yet, nor any procedures and standards in the aviation industry. HAL on the other side is an experienced company and is already working for nearly all major aviation companies in producing airframe parts, be it for civil or defence aircrafts, but they have their own standards and procedures, which makes it necessary for Dassault to adapt and find compromises instead.
It was widely reported now, that Dassault wants to divert production workshare (Livefist even talks about building complete fighters at Reliance), which is against the RFP, since it states HAL as the lead contractor and that's where the distraction to liability actually comes from. Dassault needs to be liable for the whole production, because the performance of the production line is based on the transfer of know how, toolings and proper support till the last fighter is delivered, not just till the 18th fighter is delivered and if Dassault is not able to do it, there is an L2 that might!

(iii) MLU will be made in partnership with India. a vice president of Dassault told me "it would be stupid to do otherwise"

Which again shows that Dassault is only looking at it's own interests (not even the best interest of Rafale as a fighter!), because getting India into the MLU only means, getting Indian funds for developments that are a decade away.
If Dassault actually would see India as a partner for the Rafale, they would had implemented Indian and French requirements in the F3R upgrade, which would be availble directly through the licence production, makes the F3R far more capable and actually would increase export customer interests. The reality now however is different and India will get a customized Rafale version for extra costs, with no benefits for French forces or export customers (most likely Gulf countries that can't get Israeli techs and weapons). And with the custom Rafale as the base, India will surely look for more custom upgrades in future and not necessarily on things the French forces might want by then (see MKI upgrade path).

 

[anant_s]

And there lies the real problem, because Dassault wants these Indian companies to supply parts for French or export Rafales at lower costs than in Europe, that's why Dassault is so eager to create copy production lines from their own once, which works with Reliance since they don't have any production line yet, nor any procedures and standards in the aviation industry. HAL on the other side is an experienced company and is already working for nearly all major aviation companies in producing airframe parts, be it for civil or defence aircrafts, but they have their own standards and procedures, which makes it necessary for Dassault to adapt and find compromises instead.
It was widely reported now, that Dassault wants to divert production workshare (Livefist even talks about building complete fighters at Reliance), which is against the RFP, since it states HAL as the lead contractor and that's where the distraction to liability actually comes from. Dassault needs to be liable for the whole production, because the performance of the production line is based on the transfer of know how, toolings and proper support till the last fighter is delivered, not just till the 18th fighter is delivered and if Dassault is not able to do it, there is an L2 that might!



Which again shows that Dassault is only looking at it's own interests (not even the best interest of Rafale as a fighter!), because getting India into the MLU only means, getting Indian funds for developments that are a decade away.
If Dassault actually would see India as a partner for the Rafale, they would had implemented Indian and French requirements in the F3R upgrade, which would be availble directly through the licence production, makes the F3R far more capable and actually would increase export customer interests. The reality now however is different and India will get a customized Rafale version for extra costs, with no benefits for French forces or export customers (most likely Gulf countries that can't get Israeli techs and weapons). And with the custom Rafale as the base, India will surely look for more custom upgrades in future and not necessarily on things the French forces might want by then (see MKI upgrade path).

Do have any info on what proposed systems (avionics etc) on Indian version of Rafale that are Third Party?
Also does the deal involve any specific weapon systems too or will those be negotiated separately? I ask this as the unit cost of one fighter (taking 15 Billion USD value of deal) looks astronomically high which points towards huge amount of customization for Indian contract over Standard configuration.

 

[HariPrasad]

Go for euro fighter. Enough of this nonsense.

They have offered a price which is 1.25 bn low. Further, they have offerred the TWC engine which can be upgraded to 120 KN to be used in AMCA. They have offerred a partnership in EURO FIGHTEr as well.

 

[halloweene]

No idea about it and Dassault definitely will not communicate about it, as they consider it is the client's privilege. Only things i cans say is that the opening of two new hard points and SATCOM integration are self financed (not by french state)

@halloweene

Thanks for this information ; It looks like some " Paid media " in India
is trying to spread mis nformation deliberately

i wouldn't say so. Media depend on their sources and stories abour MMRCA seem juicy....

 

[sancho]

Do have any info on what proposed systems (avionics etc) on Indian version of Rafale that are Third Party?

Third party = non French, possibly the LDP, EW or weapons. Third party = French parts different from what French forces want, possibly HMS, IRST or weapons.
It shouldn't be surprising if IAF wants similar things for the Mirage 2000 upgrade as well as the Rafale, which can mean Topsight HMS, SPICE 2000 PGMs, Litening LDP and maybe different LGBs (Israeli or Indian).

Also does the deal involve any specific weapon systems too or will those be negotiated separately? I ask this as the unit cost of one fighter (taking 15 Billion USD value of deal) looks astronomically high which points towards huge amount of customization for Indian contract over Standard configuration.

No weapon deals will always done in seperate tenders and for the price, you get what you pay for. If you want an advanced fighter, with top class radar, systems and weapons + credible ToT, you have to pay more, otherwise we could had gone for US fighters too.

 

[halloweene]

Forgot to say that a HMS is also being integrated on Dassault self financing